Lecture 03
Lesson 03  
1. If the controls are likely to lead to a true and fair set of financial statements the auditor will test
those controls. 
2. If they appear weak he will not rely on the controls but carry out extensive testing of the
transactions and balances which appear in the financial statements by means of substantive
3. If the controls are operating effectively, the auditor can reduce the amount of substantive testing
described above and adopt a reliance approach. 
4. If not then the auditor will be forced into a extensive substantive approach

What are the features of auditing profession?

In Pakistan auditing profession is allied with the Institute of Chartered Accountants of Pakistan (ICAP). It
is an autonomous body incorporated under the Chartered Accountants Ordinance 1961.
ICAP is a regulatory body that enjoys a self regulatory status. Its affairs are run by a council which is elected
by its member (Chartered Accountants).

Only those members of the ICAP are eligible of doing audit who have obtained license for the purpose,
these are known are practicing members.
Management of ICAP
The President is the Chief Executive of the Institute. The administrative head of the Institute is the
Executive Director/Secretary who functions under the directions of the Council, Executive Committee,
The President and the Vice Presidents
The Executive Director in performance of his functions is assisted by:  
• Secretary 
• Director Technical Services 
• Director Professional Standards Compliance 
• Director Education & Training 
• Director Examinations 
• Regional Director North 
The prime responsibilities of Executive Director include Personnel Management; Financial Management;
Office Administration; Publications; Information Systems; Conducting and performing Secretarial functions
for the Council and Executive Committee Meetings.

Knowing the audit profession and other services?

Auditing firms do not describe themselves as auditors. They describe themselves as Chartered Accountants.
Auditing firms are composed of accountants who perform audits for their clients. They also perform other
services. The small chartered accountant firms especially may spend more time on other services than on
 The other services may include:
a. Writing up books of accounts (Book keeping) 
b. Balancing books of accounts (Extracting trial balance)
c. Preparing final accounts
d. Tax management
e. Statutory form filling
f. Financial consultancy
g. Management and system consultancy
h. Liquidation and receivership work
i. Investigations (Fraud audit)

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